Skip to main content

Full text of "The water question : address of Mayor Warren Olney"

See other formats

v?    v  *  M          V    *rv  •*    w  » 






Address   of  Mayor    Warren    Olney.     Published   by 
Bay  Cities  Water  Company  by  Permission. 

Before  you  elected  to  office  the  present,  Mayor  and  City 
Council  you  pledged  them  in  the  strongest  possible  manner 
to  devise,  if  possible,  and  present  to  you  some  plan  by  which 
the  City  should  become  the  owner  of  its  own  water  works 
system.  The1  Mayor  and  Council  have  had  this  pledge  in 
mind  all  the  time  and  to  the  best  of  their  ability  have  redeemed 
their  promises.  It  has  been  no  easy  task.  It  has  required 
much  time,  much  thought,  and  no  small  amount  of  negotia- 
tion with  different  corporations.  The  result  of  our  labors 
is  before  you.  We  have  done  our  best  and  it  is  for  you  to 
approve  or  reject. 

As  my  term  of  office  is  about  to  expire,  and  I  have  given 
much  attention  and  study  to  the  matter  of  water  supply  for 
Oakland,  I  take  it  that  it  will  not  be  out  of  place  for  me  to 
lay  before  you  a  condensed  statement  of  the  situation  as  it 
appears  to  me.  To  do  so  it  is  necessary  to  begin  with  a  brief 
history  covering  the  period  of  the  present  administration. 


Immediately  on  taking  office  negotiations  were  opened 
with  the  Bay  Cities  Water  Company,  keeping  in  mind  that 
it  would  be  better  for  Oakland  if  there  should  be  a  strong 
rival  to  the  Contra  Costa  Water  Company.  The  City  thereby 
would  reap  the  advantage  of  competition  in  the  sale  to  it  of 
a  water  plant  and  could  make  terms  with  the  corporation 
that  would  do  the  most  for  the  City  for  the  least  money. 
Negotiations  were  also  opened  with  other  corporations  and 
individuals  claiming  to  own  a  water  supply.  The  advisability 
of  buying  out  the  Contra  Costa  Water  Company  if  the  pur- 
chase could  be  made  at  anything  like  a  fair  value  was  kept 
in  mind  all  the  time.  Personally  I  have  at  all  times  been 
willing,  and  I  think  the  members  of  the  Council  had  the  same 
views,  that  it  would  be  advisable  to  buy  out  the  Contra  Costa 
Water  Company  even  if  we  had  to  pay  a  full  million  of  dollars 
more  than  the  property  was  really  worth.  What  the  actual 
value  of  that  property  is  will  appear  further  on.  But,  what- 
ever its  value,  I  am,  and  always  have  been,  willing  to  pay  a 
large  bonus  to  rid  ourselves  of  that  corporation. 

The  first  proposition  from  the  Bay  Cities  Water  Corn- 
pan  v  was  that  it  should  bring  water  in  any  quantity  the  City 
desired  to  the  eastern  boundary  of  Oakland  and  sell  it  to  the 

City  by  the  million  gallons  for  the  period  of  twenty  years. 
This  proposition  was  afterwards  withdrawn  by  the  Company 
under  the  advice  of  its  lawyers  that  a  twenty  years'  contract 
could  not  be  made  binding  upon  the  City. 

After  this  stand  was  taken  negotiations  proceeded  upon 
another  basis,  which  resulted  in  the  proposition  submitted 
by  me  to  the  Council  on  August  10,  1903.  In  short,  this 
proposition  of  the  Bay  Cities  Water  Company  was  much  like 
the  one  now  before  the  people,  except  that  it  was  proposed 
to  utilize  the  flood  waters  of  Del  Valle  Creek  alone,  Isabel 
Creek  not  being  mentioned. 

The  Council  employed  Mr.  Desmond  Fitzgerald  to  ex- 
amine the  proposed  scheme  and  report  thereon.  Mr.  Fitz- 
gerald, at  considerable  expense  to  the  City,  made  an  exami- 
nation of  the  properties  proposed  to  be  conveyed  by  the  Bay 
Cities  Water  Company  and  in  his  report  stated  three  objec- 
tions to  the  proposition.  On  account  of  these  three  objections 
Mr.  Fitzgerald  disapproved  of  the  proposition.  BUT  ALL 

By  most  unfair  argument  it  is  stated  and  reiterated  that 
Mr.  Fitzgerald's  report  is  hostile  to  the  proposed  plan  of  the 
Bay  Cities  Water  Company.  "Damnable  iteration"  has 
done  its  work,  and  a  lodgment  has  been  made  in  the  minds 
of  many  people  that  the  present  plan  or  proposition  now 
before  you  has  been  condemned  by  Mr.  Fitzgerald.  Such 
is  not  the  case.  A  concise  statement  of  His  three  objections 
to  the  old  proposition  will  s1~ow  how  unfair  the  argument  is. 
The  argument,  too,  is  a  fair  type  of  the  methods  of  the  Contra 
Costa's  advocates. 

The  first  and  most  important  objection  made  by  Mr. 
Fitzgerald  was  that  the  Del  Valle  Creek  alone  would  only, 
in  a  period  of  excessive  drought  like  1898  and  1899,  produce 
11,350,000  gallons  of  water  per  day  for  the  City  of  Oakland, 
after  deducting  the  claims  of  riparian  owners  on  the  creek 
below  the  dam. 

It  strikes  me  that  a  supply,  in  such  a  period  of  drought, 
of  11,350,000  gallons  of  water  per  day,  would  be  immensely 
valuable  to  the  City  of  Oakland.  Bear  in  mind  that  Mr. 
Fitzgerald's  estimate  was  for  water  from  the  Del  Valle  Creek 
alone  and  he  referred  to  a  period  of  the  most  prolonged  drought 
of  which  we  know  in  California.  One  naturally  inquires 
what  -the  Contra  Costa  Water  Company  could  do  in  such  a 
season  of  drought.  No  eleven  millions  of  gaHons  per  day 
nor  the  half  of  it,  could  be  obtained  from  Lake  Chabot.  The 
supply  from  that  lake  must  be  supplemented  and  helped  out 
from  the  Niles  Cone.  The  City  can  get  water  from  the  Niles 
Cone  just  as  well  and  as  easily  as  can  the  Contra  Costa  Water 
Company.  But  eleven  millions  of  gallons  per  day  of  pure 

mountain  water  obtained  from  the  Del  Valle  Creek  will  tide 
over  a  city  of  120,000  people  in  seasons  of  severe  drought. 
With  Del' Valle  Creek  alone,  therefore,  the  City  would  be 
better  off  than  it  is  now  in  seasons  of  drought. 

But  don't  lose  sight  of  the  fact  that  the  present  prop- 
osition of  the  Bay  Cities  Water  Company  is  to  add  the  flood 
waters  of  Isabel  Creek  to  the  supply.  This,  according  to 
the  report  of  the  engineers,  will  give  the  City  full  20,000,000 
gallons  per  day,  even  in  case  of  drought.  On  the  head  waters 
of  Isabel  Creek  the  rainfall  is  heavier  than  on  Del  Valle  Creek. 

Therefore  the  first  and  greatest  objection  of  Mr.  Fitz- 
gerald is  more  than  answered. 

The  second  objection  was  that  BELOW  the  dam  the 
waters  of  the  hills  would  mingle  with  the  stream  before  the 
pipe  took  up  the  water,  and  possibly  affect  its  quality  unless 
filtered.  But  the  distance  is  not  great  and  as  these  hills  are 
high  and  steep  we  all  know  that  the  danger  of  contamination 
is  extremely  small.  The  bulk  of  the  water  would  come  from 
the  reservoir  above,  where  its  quality  is  approved  by  Mr. 
Fitzgerald.  But  suppose  there  is  danger,  it  can  be  entirely 
obviated,  according  to  Mr.  Fitzgerald,  by  filtration.  I  call 
on  you  to  compare  the  low  hills  of  farming  and  grazing  land 
which  drain  into  Lake  Chabot  with  the  steep  mountainous 
country  about  the  Del  Valle  Creek  and  say  which,  from  the 
very  nature  of  the  case,  must  supply  the  better  water.  Is 
not  Mr.  Fitzgerald's  second  objection  answered? 

The  third  and  last  objection  was  as  to  the  character  of 
the  dam  the  Bay  Cities  Water  Company  proposed  to  erect 
for  the  purpose  of  storing  the  flood  waters  of  Del  Valle  Creek. 
Mr.  Fitzgerald  said  that  no  dam  of  the  kind  proposed  had 
been  actually  tried  in  the  United  States,  though  it  had  been 
much  discussed  by  engineers  and  "on  theoretical  grounds  it 
is  difficult  to  find  an  objection  to  it."  The  foreeroing  is  his 
own  language.  BUT  THE  NEW  PROPOSITION  OF  THE 

Now  what  is  there  that  Mr.  Fitzgerald  objected  to  that 
has  not  been  fully  met  by  the  proposition  now  before  you? 
Absolutely  nothing.  I  repeat  with  all  possible  emphasis 
that  the  continual  dragging  in  of  the  objections  made  by 
Mr.  Fitzgerald  in  his  report  on  the  original  proposition  of  the 
Bay  Cities  Water  Company  is  for  the  purpose  of  confusing 
your  minds  and  is  not  fair  argument.  It  ought  to  have  no 
weight  with  the  voter. 


Mr.  Fitzgerald's  report  was  presented  to  the  Council  on 
January  18,  1904,  and  the  Council,  basing  its  action  on  that 
report,  refused  to  enter  into  a  contract  with  the  Bay  Cities 
Water  Company.  No  attempt  was  made  by  the  Council  to 
get  a  second  or  better  proposition  from  the  Bay  Cities  Water 
Company.  Negotiations  were  suspended.  That  negotia- 
tions were  suspended  was  because  of  a  proposition  that  was 
made  by  the  Contra  Costa  Water  Company  to  the  Council 
to  fix  the  valuation  of  its  plant  by  arbitration.  It  seemed  to 
all  that  here  was  to  be  a  solution  of  our  difficulties.  Bear  in 
mind  that  Mr.  Fitzgerald's  report  was  not  made  public  until 
January  18,  1904.  Until  this  report  was  public  the  Contra 
Costa  Water  Company  did  not  know  what  the  report  would 
be.  It  evidently  was  afraid  of  it.  Evidently,  too,  its  mana- 
gers were  not  so  doubtful  then  of  the  title  of  the  Bay  Cities 
Water  Company  to  the  flood  waters  of  the  Del  Valle  Creek 
as  they  profess  to  be  now,  and  which  they  and  their  followers 
are  continually  dinning  into  the  ears  of  the  Oakland  voters. 
My  reason  for  this  conclusion  is  that  four  days  previous  to 
the  filing  of  Mr.  Fitzgerald's  report,  and  while  the  Contra 
Costa  Water  Company's  managers  were  ignorant  as  to  what 
it  would  be,  and  fearful  of  its  effect,  they  delivered  to  the 
Council  a  written  proposition,  purporting  to  be  signed  by 
Mr.  Dingee  as  president,  to  the  effect  that  the  Contra  Costa 
Water  Company  would  submit  the  question  of  the  value  of 
its  plant  for  rate  fixing  purposes,  and  for  leasing,  and  for  pur- 
chase, to  a  board  of  three  engineers,  one  to  be  selected  by  the 
City,  one  by  the  Contra  Costa  Water  Company,  and  they 
two  to  select  the  third.  Now  we  seemed  to  have  a  solution 
of  our  difficulties!  It  was  just  what  the  City  wanted.  It 
wanted  a  board  of  competent  persons  to  fix  the  value  of  the 
Contra  Costa  Water  Company's  plant.  The  people  of  Oak- 
land are  willing,  more  than  willing,  to  pay  water  rates  on  a 
fair  value  of  the  existing  plant.  The  people  of  Oakland  are 
willing,  more  than  willing,  to  buy  the  Contra  Costa  plant  at 
a  fair  valuation.  I  am  myself  willing,  as  a  citizen  and  tax 
payer  of  Oakland,  that  she  should  pay  the  full  value  of  the 
Contra  Costa  Water  Company's  plant  when  ascertained  and 
add  thereto  a  large  bonus,  in  order  to  get  rid  of  the  corpora- 
tion and  eliminate  its  influence  from  our  City  politics.  I 
believe  three-fourths  of  the  voters  of.  Oakland  are  of  the  same 

Personally  I  hailed  the  written  proposition  of  the  cor- 
poration to  submit  this  question  of  value  to  arbitration  with 
the  greatest  pleasure.  The  term  "value"  as  applied  to  water 
property  for  rate  fixing  purposes  has  been  settled  by  the 
courts,  and  the  proposition  of  the  company  was  to  find  this 
"value"  by  arbitration.  But  before  the  proposition  was 

reduced  to  a  written  contract  so  as  to  be  binding  upon  the 
Company  Mr.  Fitzgerald's  report  came  out.  Assuming  that 
we  were  dealing  with  men  who  would  not  go  back  on  a  plain, 
unambiguous  written  statement  of  what  they  were  willing 
to  do,  a  contract  was  drawn  up  embodying  the  exact  language 
of  the  written  proposition,  neither  more  nor  less.  Not  a  word 
was  added,  nor  was  a  word  taken  therefrom,  except  to  provide 
for  carrying  out  the  written  proposition.  In  other  words, 
to  make  it  binding  upon  the  Contra  Costa  Water  Company. 

The  Contra  Costa  Water  Company  refused  to  sign  the 
contract  and  withdrew  its  proposition. 

I  have  been  told  that  when  the  President  of  the  Com- 
pany was  reproached  by  a  member  of  the  City  government 
for  not  keeping  faith  he  excused  himself  by  saying  that  when 
he  made  the  proposition  he  did  not  know  what  Mr.  Fitzgerald's 
report  was!!!  Is  comment  necessary? 


Before  closing  this  statement  of  facts  preceding  the 
present  proposition  of  the  Bay  Cities  Water  Company  it  is 
my  duty  to  remind  you  of  the  appraisement  of  the  value  of 
the  Contra  Costa  Water  Company's  plant  made  by  Mr.  Des- 
mond Fitzgerald,  the  same  engineer  who  is  so  much  quoted, 
because  of  the  three  objections  made  by  him  to  the  original 
proposition  of  the  Bay  Cities  Water  Company.  Previous  to 
taking  office  I  relied  upon  the  evidence  of  the  nine  engineers 
who  testified  on  behalf  of  the  City  in  the  water  case  commonly 
known  as  the  Hart  case,  as  against  the  three  engineers,  two 
of  whom  were  employes  of  the  water  company  and  were  the 
only  engineers  produced  by  the  water  company  on  the  trial. 
It  seemed  to  me  that  there  could  be  no  doubt  that  the  testi- 
mony of  these  nine  men  should  be  relied  upon  rather  than 
the  testimony  of  the  two  hired  men  of  the  Contra  Costa  Water 
Company.  These  nine  engineers  fixed  the  value  of  the  Contra 
Costa  Water  Company's  plant  in  the  neighborhood  of  three 
millions  of  dollars.  After  assuming  the  responsibilities  of 
office  I  .began  to  reflect  that  possibly  these  engineers  had  been 
influenced  by  the  fact  that  they  had  been  called  by  the  City 
as  witnesses,  their  fees  paid  by  the  City,  and  perhaps  their 
testimony  was  biased.  I  wanted  some  additional  and  out- 
side evidence  that  could  be  relied  upon  as  to  the  true  value 
of  the  Contra  Costa  Water  Company's  plant.  Thereupon  I 
united  with  Mr.  John  L.  Howard  in  hiring  Mr.  Desmond  Fitz- 
gerald to  make  a  careful  and  accurate  appraisement  of  that 
portion  of  the  Contra  Costa  Water  Company's  plant  used  in 
supplying  Oakland  with  water.  I  gave  to  Mr.  Fitzgerald 
written  instructions,  which  have  been  published.  Under 
those  instructions  Mr.  Fitzgerald  appraised  all  of  the  property 
the  Contra  Costa  Water  Company  used  in  supplying  Oak- 

land,  excepting  only  the  value  of  the  land  for  ordinary  pur- 
poses, which  any  real  estate  agent  is  more  competent  to  ap- 
praise than  an  engineer.  That  is  to  say,  Mr.  Fitzgerald  ap- 
praised the  distributive  system,  the  water  rights,  the  dams, 
and  other  works,  the  increased  value  of  the  land  used  for  re- 
servoir purposes  by  reason  of  its  being  suitable  for  such  pur- 
poses, in  fact  everything  except  the  value  of  the  land  for  or- 
dinary farming  purposes,  and  a  small  amount  of  personal 
property,  such  as  tools,  etc.  Now  the  Contra  Costa  Water 
Company  claims  to  own  land  in  the  watershed  of  San  Leandro 
reservoir  to  the  extent  of  about  five  thousand  acres.  Mr. 
Fitzgerald  took  into  consideration  its  special  value  for  the 
water  company's  purposes,  but  did  not  appraise  its  value  as 
farming  or  grazing  land.  Suppose  it  is  worth  for  such  pur- 
poses fifty  dollars  per  acre,  a  large  estimate,  that  would  make 
$250,000.  He  did  not  appraise  the  one  hundred  and  fifty 
acres  of  land  at  Alvarado  because  the  Company's  land  there 
is  no  more  valuable  than  other  lands  there  selling  for  about 
$100  per  acre.  But  suppose  we  add  $50,000  for  this  land 
and  $10,000  for  the  tools  and  we  have  $310,000  for  property 
Mr.  Fitzgerald  did  not  appraise.  But  everything  else,  dis- 
tributive system,  reservoirs,  dams,  pumping  plants,  water 
rights,  pipe  lines,  etc.,  the  total  plant  in  fact,  with  the  ex- 
ceptions above  noted,  he  appraised  at  $2,689,185.  Now,  if 
we  add  a  liberal  estimate  for  the  items  he  did  not  appraise, 
we  have  about  $3,000,000  for  the  entire  plant.  Then,  to  be 
on  the  safe  side,  let  us  add  $500,000  to  the  above  and  we  have 
$3,500,000  as  the  entire  value  of  the  Contra  Costa  Water 
Company's  plant. 


Outside  and  independent  ot  any  expert  testimony  as  to 
valuations,  there  is  proof  positive  that  the  testimony  of  the 
City  Engineers  and  of  Mr.  Desmond  Fitzgerald  as  to  the 
value  of  the  Contra  Costa  Water  Company's  plant  is  a  liberal 
one.  It  is  this — the  rainfall  about  the  Bay  of  San  Francisco 
is  such  that  water  for  irrigation  is  not  needed.  Consequently 
there  is  not  enough  demand  about  the  Bay  of  San  Francisco 
to  create  a  market  price.  In  the  southern  part  of  this  State 
the  rainfall  is  much  smaller  and  water  is  scarce  and  the  de- 
mand for  water  is  so  great  that  it  has  a  regular  market  price. 
Water  in  the  southern  part  of  the  State  has  become  a  com- 
modity, bought  and  sold  by  the  miner's  inch.  A  water  com- 
pany develops  a  water  supply  and  enters  into  a  contract  to 
furnish  perpetually  to  a  buyer  a  supply  of  water  for  so  much 
per  miner's  inch.  It  will  be  observed  that  the  company  must 
keep  up  the  plant  and  continue  to  supply  the  water.  Now 
in  that  country,  where  water  is  in  so  much  demand,  that  it 
has  a  market  price,  the  value  of  the  miner's  inch  up  t<>  the 
late  season  of  excessive  drought,  was  under  $1,000  an  inch 

and  water  could  be  bought  at  that  price  and  less  of  companies 
developing  water  supplies.  Seven  Hundred  and  Sixty-eight 
miners'  inches  of  water  is  equal  to  ten  million  of  gallons  per 
day,  which  is  about  what  the  Company  has  been  furnishing 
to  Oakland.  The  City  of  Oakland,  therefore,  at  the  market 
rate  for  water  in  Southern  California,  should  pay  $768,000 
for  a  daily  perpetual  supply  of  10,000,000  gallons.  Of  course 
the  distributive  system,  supply  pipes,  etc.  should  be  added 
thereto,  but  it  would  bring  the  total  value  of  the  Contra  Costa 
Water  Company's  plant,  estimated  upon  the  basis  of  the 
selling  price  for  water  in  Southern  California,  below  rather 
than  above  the  figures  of  Mr.  Desmond  Fitzgerald. 

Again  Mr.  Fitzgerald's  figures  are  confirmed  by  the  Bay 
Cities  Water  Company,  which  offers  a  complete  plant  and 
water  rights  for  a  daily  supply  of  20,000,000  gallons  for 


Mr.  John  L.  Howard  has  spent  more  time  than  any  indi- 
vidual, not  an  engineer,  that  I  know  of  in  going  over  the 
property  of  the  Contra  Costa  WTater  Company  and  estimating 
its  value.  He  took  the  figures  of  all  the  engineers  and  called 
Mr.  Adams,  the  engineer  for  the  Contra  Costa  Water  Com- 
pany, and  Mr.  Desmond  Fitzgerald  into  consultation.  He 
assures  me  that  it  is  impossible  to  appraise  the  property  of 
the  Contra  Costa  Water  Company  at  more  than  about  four 
millions  of  dollars. 

I  make  no  apology  for  spending  so  much  time  on  these 
questions  of  value,  for  the  value  of  the  Contra  Costa  Water 
Company's  plant  must  be  considered  in  all  discussions  as  to 
what  action  the  City  of  Oakland  should  take.  That  corpora- 
tion forces  the  question  of  values  upon  us. 

After  the  proposition  of  the  Bay  Cities  Water  Company 
had  been  rejected  by  the  Council,  and  after  arbitration  had 
failed,  the  Council  fixed  the  rate  we  must  pay  for  water  for 
the  year  beginning  July  ist,  1904,  upon  a  valuation  of  $4,- 
700,000  on  the  Oakland  division  and  allowed  practically,  as 
part  of  the  running  expenses,  every  demand  of  the  Contra 
Costa  Water  Company,  even  to  allowing  for  the  amount  of 
subscriptions  made  by  that  corporation  to  public  celebrations 
and  to  charity.  In  my  opinion  the  Council  erred  on  the  side 
of  too  great  liberality  to  the  water  company.  But,  notwith- 
standing this,  the  corporation  immediately  brought  a  suit 
in  the  United  States  Circuit  Court  and  obtained  a  preliminary 
injunction.  That  Court  is  congested  with  business  and  there 
is  no  telling  when  the  case  can  be  heard  on  its  merits.  I 
have  no  doubt  of  the  results  when  that  hearing  can  be  ob- 
tained. But  meanwhile  we  are  paying  rates  on  a  valuation 
of  seven  millions  of  dollars  and  paying  extravagant  sums 
besides  for  operating  expenses  which  the  company  charges 
against  the  City. 



Having  now  given  as  briefly  as  possible  a  history  of 
what  has  taken  place  up  to  within  a  few  months,  with  such 
comments  as  the  occasion  seemed  to  call  for,  I  now  take  up 
the  situation  that  confronts  us. 

In  the  language  of  President  Cleveland,  "it  is  a  condition 
not  a  theory"  that  confronts  us.  In  the  first  place  there  is  no 
use  to  talk  of  buying  out  the  Contra"  Costa  Water  Company's 
plant  unless  we  are  willing  to  pay  at  least  seven  million  dollars 
therefor.  There  is  no  statement  before  the  people  that  the  cor- 
poration will  sell  for  that  sum  even.  Are  you  willing  to  pay 
that  amount?  If  the  city  will  not  agree  to  pay  as  much  as 
seven  million  dollars,  then  you  can  rest  assured  that  if  a  Council 
fixes  the  water  rates  based  upon  a  less  valuation,  another  suit 
will  be  brought  by  the  company  in  the  United  States  Circuit 
Court  to  enjoin  their  collection.  We  can  rely  upon  suits  being 
brought  every  year  until  one  of  the  cases  reaches  the  Supreme 
Court  of  the  United  States.  That  court  has  had  other  water 
cases  before  it  and  we  can  fairly  assume  a  knowledge  of  what 
that  tribunal  will  do  when  our  case  reaches  it.  It  has  uniformly 
decided  for  the  people  heretofore.  It  will  put  a  quietus  upon  the 
claims  of  the  water  company.  But  meanwhile  we  have  turmoil 
and  litigation,  unless  we  feel  that  it  is  better  to  accede  to  the 
demands  of  the  company  and  pay  twice  what  its  property  is 
worth.  Do  you  want  to  do  it?  If  so  there  is  no  use  carrying 
the  matter  any  further.  I  call  on  you  to  do  one  thing  or  the 
other.  If  you  are  not  willing  to  accede  to  these  demands,  then 
let  us  install  a  water  plant  of  our  own.  For  my  part  I  am  in 
favor  of  accepting  the  Bay  Cities  Water  Company's  proposition 
because,  if  there  were  no  other  reasons,  IT  PROPOSES  TO 

Reflect  for  a  moment  and  you  will  realize  that  there  is  no 
adequate  supply  of  water  for  the  cities  on  our  side  of  the  bay 
if  they  keep  on  growing,  as  they  no  doubt  will,  nearer  than  the 
waters  of  Alameda  Creek.  The  flood  waters  of  that  creek  are 
now  going  to  waste  into  the  bay.  That  creek  and  its  tribu- 
taries are  our  natural  source  of  water  supply  and  if  the  Bay 
Cities  Water  Company  can  now  deliver  at  the  margin  of  the 
city,  for  the  sum  of  $3,750,000,  a  plant  and  water  supply  equal 
to  twenty  million  gallons  per  day,  it  is  the  greatest  possible 
folly,  from  a  business  point  of  view,  not  to  close  with  the 
proposition  and  deal  with  the  Contra  Costa  Water  Company 
afterwards.  By  doing  so  we  shall  be  in  a  position  to  dictate 

Terms  to  that  corporation  and  compel  it  to  sell  at  a  fair  valua- 
tion. I  assume  that  the  city  of  Oakland  will  never  attempt  to 
get  the  property  for  less  than  it  is  fairly  worth.  I  shall  go  into 
this  question  of  business  policy  further  on. 


In  short  it  is  to  impound  the  flood  waters  of  Del  Valle 
and  Isabel  creeks  and  store  them  in  the  mountains  back  of  Mt. 
Hamilton  at  an  elevation  of  seventeen  hundred  feet  above  sea 
level,  and  bring  the  same,  by  means  of  a  wood  stave  pipe,  past 
Pleasanton  and  through  the  Niles  Canyon  to  the  eastern  bound- 
ary of  the  citv  of  Oakland,  the  plant  to  be  complete  in  all 
SELECTED  BY  THE  CITY  OF  OAKLAND,  and  to  have  a 
capacity  of  delivering  daily  twenty  millions  of  gallons  of  water. 

We  already  have  the  report  of  Mr.  Fitzgerald  on  the  Del 
Valle  Creek  and  we  have  the  report  of  the  board  of  three 
engineers  recently  appointed  on  the  Del  Valle  and  Isabel  creeks 
combined,  and  from  those  reports  we  know  there  will  be  suffi- 
cient water,  even  in  years  of  extreme  drought,  to  give  us  the 
twenty  millions  of  gallons  the  works  provide  for. 

A  perfect  title  to  all  of  the  property  to  be  conveyed  and  a 
pertect  title  to  the  right  or  privilege  to  impound  these  flood 
waters  is  guaranteed  by  the  company,  and  no  money  is  to  be 
paid  until  the  city  authorities  are  absolutely  satisfied  that  the 
guaranty  is  made  good.  That  is  to  say,  the  company  contracts 
to  give  a  perfect  title  and  will  not  claim  the  right  to  draw  down 
any  portion  of  the  purchase  price  without  securing  the  repay- 
ment to  the  city  of  the  amount  so  drawn  down  in  the  event  it 
should  turn  out  that  the  company's  title  is  not  good ;  and  if  that 
method  of  security  is  not  satisfactory,  the  bonds  may  be  left  in 
escrow,  to  be  sold  when  the  title  is  made  perfectly  satisfactory. 
The  purchase  price  is  to  be  $3,750,000. 

These  are  the  general  terms  of  the  proposition,  but  if  you 
agree  to  accept  the  proposition  in  its  general  terms  then  a 
careful  and  elaborate  contract  is  to  be  drawn  THAT  SHALL 
carry  out  the  agreement.  In  other  words,  the  proposition  is 
preliminary,  its  general  purposes  being  stated,  and  if  you  ap- 
prove of  the  same,  then  the  drafting  of  the  formal  contract 
between  Oakland  and  the  Bay  Cities  Water  Company  is  to  be 
left  to  your  attorneys. 

I  think  it  is  perfectly  safe  to  say  that  never  in  the  history  of 
the  acquisition  of  large  or  valuable  property  by  any  municipality,  • 
or  State,  or  country,  were  there  ever  before  so  many  safeguards 
used  to  protect  the  rights  of  the  people.  In  ordinary  business 
transactions  no  man  would  in  such  an  important  matter  so 
completely  surrender  his  property  to  the  good  faith  and  fair- 


mindedness  of  his  opponent  and  his  opponent's  lawyers  as  the 
corporation  has  done  to  the  city  of  Oakland  and  its  lawyers.  It 
is  a  compliment  to  the  people  of  Oakland  that  the  Bay  Cities 
Water  Company  is  willing  to  trust  the  people  so  fully. 

Now,  what  are  the  objections  to  this  proposition  ?  I  shall 
take  up  the  principal  ones  about  which  we  hear  most. 


There  are  more  objections  urged  on  the  grounds  of  in- 
secure or  insufficient  title  in  the  Bay  Cities  Water  Company 
than  upon  any  other  ground  For  my  part  I  would  never 
consent  to  the  city  paying  any  money,  or  contracting  to  pay 
any  money,  for  property  to  which  there  was  not 
a  good  title,  and  therefore  if  there  is  any  doubt  about  the  title 
of  the  Bay  Cities  Water  Company  no  money  should  be  paid  to 
it,  or  if  paid,  the  city  should  be  ?:nply  secured  in  its  return, 
until  the  title  has  been  fully  established  by  decisions  of  the 
courts.  That  is  just  what  the  proposition  of  the  Bay  Cities 
Water  Company  contemplates,  and  in  my  opinion  it  is  a  more 
satisfactory  proposition,  as  I  have  already  said,  than  was  ever 
before  made  to  a  municipality.  It  is  evident  that  the  men  who 
have  put  their  money  into  this  corporation  are  absolutely  sure 
of  their  title.  They  stand  to  lose  millions  of  dollars  if  the  title 

For  my  own  part,  when  I  reflect  that  the  flood  waters  of 
Del  Valle  and  Isabel  Creeks  have  never  been  actually  used, 
that  they  have  always  gone  and  are  now  going  to  waste,  that 
a  great  city  (for  I  look  upon  Oakland,  Berkeley  and  Alameda 
as  practically  one  city)  is  rapidly  growing  up  almost  alongside 
of  the  outlet  of  these  streams,  that  this  great  city  has  no  other 
adequate  source  of  supply  in  the  neighborhood  except  from 
these  streams,  I  have  very  little  doubt  that  the  title  of  the  Bay 
Cities  Water  Company  will  be  confirmed  by  the  courts.  The 
only  possible  competitor  is  the  Spring  Valley  Water  Works, 
which  is  now  taking  from  Alameda  Creek  less  than  sixteen 
millions  of  gallons  per  day  for  the  supply  of  San  Francisco.  It 
has  never  utilized  the  flood  waters  of  Isabel  Creek  or  Del 
Valle  Creek,  and  in  my  opinion  in  any  contest  between  the  Bay 
Cities  Water  Company,  which  is  undertaking  to  supply  the  city 
of  Oakland,  and  the  Spring  Valley  Water  Works,  which  is 
supplying  the  City  of  San  Francisco,  the  courts  will  say  the 
Spring  Valley  Water  Works  may  be  allowed  to  take  all  it  has 
appropriated,  namely  sixteen  millions  of  gallons  per  day,  from 
Alameda  Creek,  but  the  flood  waters  which  have  never  yet 
been  appropriated  must  and  shall  be  used  by  the  threat  city  to 
which  these  waters  naturally  belong  and  to  whose  very  ex- 
istence they  are  necessary. 

It  must  be  borne  in  mind  that  the  courts  have  always  said 
that  the  use  of  water  must  be  reasonable  so  as  to  subserve  the 

needs  of  the  greatest  possible  number.  Applying  that  prin- 
ciple, I  do  not  see  how  any  fair  tribunal  can  ever  take  from 
Oakland,  or  from  a  corporation  supplying  the  City  of  Oakland, 
the  flood  waters  of  these  creeks,  hitherto  going  to  waste,  and 
give  them  to  the  City  of  San  Francisco,  which  is  on  the  op- 
posite side  of  the  bay  and  has  other  sources  of  supply  on  the 

The  fact  is  that  the  Spring  Valley  Water  Works  many 
years  ago  turned  its  attention  to  Alameda  Creek  and  acquired 
what  water  rights  it  possesses  not  because  the  waters  of 
Alameda  Creek  were  needed  for  the  people  of  San  Francisco, 
but  because  it  feared  that  the  City  of  San  Francisco  would 
itself  utilize  the  waters  of  Alameda  Creek  and  thereby  put  the 
Spring  Valley  Water  Works  out  of  business.  The  Spring  Val- 
ley Water  Works  can  utilize  from  Pescadero  Creek  and  Butano 
Creek  enough  water,  now  flowing  into  the  ocean,  to  make  up 
for  any  lack  of  water  from  Alameda  Creek. 

The  Bay  Cities  Water  Company  claims  that  so  far  as  the 
preliminary  steps  for  the  location  of  water  rights  is  concerned 
it  is  prior  in  time  to  the  Spring  Valley  Water  Works.  About 
this  I  do  not  know.  But  this  I  do  know,  that  the  flood  waters 
of  the  Del  Valle  Creek  and  Isabel  Creek  have  never  yet  been 
utilized  and  in  my  opinion  they  belong  by  right  to  the  people 
of  Oakland  in  preference  to  the  people  of  San  Francisco. 

But  I  would  not  have  the  city  take  any  risk  whatever  in 
the  matter  and  I  do  not  believe  it  does  take  any  risk  in  accepting 
the  proposition  made  by  the  Bay  Cities  Water  Company.  Oak- 
land's present  bad  condition  on  the  water  question  is  owing  to 
the  city  not  having  utilized  the  waters  of  Alameda  Creek  long 
ago.  We  neglected  our  opportunities.  Shall  we  now,  because 
the  Spring  Valley  water  works  claims  title  to  the  flood  waters 
of  Del  Valle  and  Isabel  creeks,  sit  down  supinely  and  let  that 
corporation  impound  those  waters  and  take  them  to  San  Fran- 
cisco? Is  it  not  better  business  policy  for  us  to  say  to  the  Bay 
Cities  Water  Company :  "Make  a  fight  for  the  flood  waters  of 
those  creeks  and  if  you  win  out  we  will  take  the  property  off 
your  hands?"  Here  is  a  chance  to  acquire  a  daily  supply  of 
twenty  million  gallons  of  water.  Oakland  is  justified  in  taking 
some  risk  in  the  matter.  As  a  matter  of  fact  she  takes  none. 
Shall  we  be  so  dull  as  not  to  avail  ourselves  of  the  opportunity  ? 


The  statement  has  been  made  over  and  over  again  that  the 
proposed  pipe  line  to  be  constructed  by  the  Bay  Cities  Water 
Company  will  run  at  the  bottom  of  a  reservoir  that  the  Spring 
Valley  water  works  proposes  to  erect.  I  have  not  heard  where 
that  reservoir  is  to  be.  But  if  you  will  reflect  upon  the  situation 
you  will  conclude  that  it  is  only  another  bugaboo  conjured  into 
existence  for  the  purpose  of  frightening  voters.  The  pipe  line 


will  follow  down  the  Del  Valle  Creek,  past  Pleasanton,  anil 
along  the  county  road  down  through  the  Niles  Canyon,  probably 
following  the  line  of  the  railroad  track.  No  reservoir  can  ever 
be  constructed  along  the  proposed  pipe  line. 


Another  favorite  argument  of  the  Contra  Costa  Water 
Company  is  that  we  must  sell  the  bonds  and  the  city  will  lose 
the  interest  while  the  works  are  being  constructed.  Probably 
many  people  believe  this  statement  because  our  district  school 
bonds  were  sold  in  a  lump  and  at  one  time  and  we  are  paying 
interest  thereon  though  the  money  is  not  yet  needed.  But  those 
bonds  are  not  city  bonds  at  all.  They  are  a  school  district 
bond  and  an  entirely  different  law  applies. 

Section  149  of  the  Charter  applies  to  City  Bonds.  It  reads  : 
'NOR  SHALL  ANY  SUCH  BONDS  (that  is  bonds  for  im- 
provements, water  rights,  etc.)  BE  ISSUED  OR  SOLD  DUR- 

There  goes  another  spook! 



The  fear  that  disastrous  competition  may  ensue  between 
the  Contra  Costa  Water  Company  and  the  city  in  the  event  of 
the  city  installing  its  own  plant,  possesses  many  of  our  own  best 
citizens.  I  know  of  good  business  men  who  are  much  disturbed 
over  this  prospect.  But  a  little  examination  of  the  law  will 
show  there  is  no  good  reason  for  it.  Every  city  has  absolute 
control  of  its  streets  in  the  interest  of  the  general  public.  No 
corporation  can  use  those  streets,  except  as  ordinary  individuals 
use  them,  without  special  permission  from  the  city.  Unless  the 
Constitution  or  the  general  law  makes  provision  therefor,  no 
water  company  can  open  the  streets  in  a  city  to  lay  or  repair  its 
water  pipes  unless  the  city  gives  that  permission.  This  is  ele- 
mentary law.  Now  the  Constitution  of  California  does  provide 
for  opening  streets  by  a  water  company  for  its  pipes  WHEN 
OF  ITS  OWN.  As  soon  as  a  city  comes  into  possession  of  a 
plant  of  its  own  the  general  rule  applies  and  no  street  can  be 
opened  without  a  license  from  the  city.  See  Section  19  of  Article 
XI  of  the  Constitution  .  Is  it  to  be  supposed  that  a  city  will 
allow  its  streets  to  be  opened  and  pipe  laid  by  a  competitor  with 
itself  in  supplying  the  city  with  water?  To  ask  the  question  is 
to  answer  it.  The  Contra  Costa  Water  Company  has,  under  the 
Constitution,  and  because  we  have  no  municipal  water  plant, 
exercised  its  permissive  right  under  the  Constitution  to  las- 
pipes  in  our  streets,  and  let  us  suppose  that  after  we  have  in- 
stalled a  plant  of  our  own  we  are  still  bound,  as  matter  of 
equity,  to  permit  the  company  to  open  the  streets  to  repair  its 


pipes,  that  is  certainly  as  much  as  the  company  can  claim.  We 
can  forbid  the  laying  of  pipe  in  any  new  place  or  to  a  new 
building.  In  my  opinion  we  can  prevent  the  laying  of  new  pipe 
anywhere.  I  am  not  certain  but  the  city  would  have  the  power 
to  compel  the  water  company  to  take  up  its  pipes.  But  I  would 
never  go  that  far.  It  will  be  entirely  sufficient  to  prevent  the 
laying  of  any  new  pipe  to  put  the  Contra  Costa  Water  Company 
out  of  business. 

I  understand  there  was  no  competition  in  Vallejo  between 
the  Chabot  Water  Company  and  the  city  after  the  city  installed 
its  own  plant.  From  the  very  nature  of  the  case  there  cannot 
be  competition. 

Then  again,  the  city  has  the  power  of  taxation.  It  can 
impose  such  a  license  for  any  private  corporation  or  individual 
supplying  water  to  the  people  that  the  city  can  recoup  in  license 
taxes  any  sums  it  would  lose  by  reason  of  competition.  There- 
fore it  seems  to  me  that  the  fears  of  our  people  in  regard  to 
competition  are  entirely  groundless. 


It  will  increase  taxation  to  a  small  extent  until  the  new 
plant  is  installed  and  in  operation.  As  soon  as  the  city  begins 
to  supply  water  to  its  people  the  income  from  the  water,  at 
rates  much  below  what  we  now  have  to  pay,will  much  more  than 
pay  for  maintenance,  interest  on  the  bonds,  and  the  payments 
into  the  sinking  fund. 

.Nearly  all  the  cities  of  the  civilized  world  have  adopted  this 
method  of  supplying  its  people  with  water.  I  sometimes  think 
no  city  in  the  world  except  Oakland  and  San  Francisco  would 
tolerate  such  a  condition  as  now  exists  here.  It  is  the  universal 
experience  of  cities  owning  their  own  municipal  water  plant  that 
they  can  furnish  the  water  at  a  cheaper  rate  than  private  cor- 
porations can  and  yet  receive  an  income  therefrom.  A  few 
minutes'  reflection  makes  plain  why  this  is  so. 

Private  corporations  must  receive  interest  on  the  capital 
invested  and  it  is  a  notorious  fact  that  the  salaries  and  per- 
quisites of  the  managers  of  such  corporations  are  extravagantly 
large.  Then  when  you  consider  that  the  city,  dependent  on  a 
private  corporation,  must  pay  such  a  water  rate  as  to  give 
dividends  to  the  stockholders  and  pay  the  operating  expenses, 
you  will  see  that  there  is  every  inducement  to  make  those  oper- 
ating expenses  most  extravagant.  We  have  an  illustration  of 
that  fact  at  the  present  time.  Few  employees  are  necessary  in 
running  a  municipal  water  plant,  but  so  long  as  the  managers  of 
a  water  company  have  a  right  to  make  expenditures  and  call 
them  operating  expenses  and  the  city  has  to  foot  the  bill,  there 
is  practically  no  restraint  upon  waste  and  extravagance. 


There  are  two  items,  therefore,  viz :  Interest  on  the  money 
invested  and  the  reckless  use  of  people's  money,  that  have  been 
eliminated  in  those  cities  that  own  their  own  municipal  water 
plant.  Therefore  we  can  safely  assume  that  after  our  plant  is 
installed  our  taxes  will  be  lessened,  our  water  rates  will  be 
decreased,  and  that  year  by  year  we  are  acquiring  through  the 
sinking  fund  a  valuable  property.  At  the  end  of  forty  years  the 
plant  belongs  to  the  city. 


Some  of  the  friends  of  the  Contra  Costa  Water  Company 
claim  that  if  we  issue  bonds  to  pay  for  a  municipal  water  plant, 
that  plant  and  the  income  from  the  property  should  alone  be 
responsible  for  the  bonds  issued  in  payment  therefor.  This, 
too,  a  moment's  reflection  will  show  is  impracticable.  The 
water  plant  will  belong  to  the  city.  The  City  Council  will  have 
the  right  to  fix  the  rates  that  our  people  shall  pay  for  water.  If 
the  city  is  under  no  pecuniary  obligation  to  see  that  the  bonds 
are  paid  the  temptation  will  be  irresistible  to  reduce  the  water 
rates.  They  are  certain  to  be  put  at  such  a  low  figure  that 
enough  cannot  be  realized  to  pay  the  interest  on  the  bonds,  the 
running  expenses,  and  lay  aside  enough  for  the  sinking  fund. 
No  man  who  has  money  to  lend  will  overlook  this  fact.  He 
will  not  buy  the  water  bonds  of  a  city  which  does  not  make  itself 
responsible  for  the  payment  of  those  bonds.  The  capitalist  will 
say  at  once :  "My  money  will  be  completely  at  the  mercy  of  the 
Council  in  "fixing  the  rates  to  be  paid  by  consumers  of  water," 
and  he  will  refuse  to  lend  his  money.  Therefore,  if  the  friends 
of  the  Contra  Costa  Water  Company  can  get  the  people  of 
Oakland  to  believe  that  only  the  water  supply  plant  should  be 
responsible  for  the  bonds  issued,  then  we  may  as  well  give  up 
all  hope  of  obtaining  money  with  which  to  supply  ourselves 
with  such  a  plant.  If  the  city  is  liable  on  the  bonds,  the  Coun- 
cil will  fix  rates  high  enough  to  pay  all  charges  and  leave  a 

There  is  also  another  question  to  be  considered,  viz :  that 
the  unimproved  property  in  the  city  should  be  made  to  contrib- 
ute its  share  toward  the  sinking  fund  that  is  to  pay  for  the 
water  works. 


Oakland  is  growing  by  leaps  and  bounds.  The  same  is 
true  of  Berkeley,  and  to  a  lesser  extent  of  Alameda.  These 
three  cities  must  inevitably  become  ere  long  consolidated  into 
one  city.  The  present  supply  of  the  Contra  Costa  Water  Com- 
pany is  barely  adequate  for  their  needs  at  the  present  time.  We 
must  look  forward  to  the  time  when  in  the  near  future  there 
will  be  250,000  people  needing  water  within  the  boundaries  of 

these  present  three  cities.  Where  is  it  to  come  from  ?  If  we  do 
not  avail  ourselves  of  this  opportunity  to  get  the  flood  waters  of 
Isabel  and  Del  Valle  creeks,  there  is  no  sufficient  source  of 
supply  this  side  of  the  Sierras.  If  we  let  this  opportunity  slip, 
in  ten  years  from  now  we  shall  be  much  worseoff  than  we  are 
at  present.  If  we  obtain  this  supply  of  twenty  millions  of  gal- 
lons per  day  it  is  only  a  question  of  a  short  time  when  these 
three  cities  will  need,  in  addition,  such  water  supply  as  the 
Contra  Costa  Water  Company  can  furnish  us.  If  we  let  the 
opportunity  to  get  the  supply  from  these  creeks  from  the  Mt. 
Hamilton  range  go  by,  our  condition  will  be  deplorable,  for 
that  supply  will  be  taken  to  the  city  of  San  Francisco.  We 
should  not  hesitate,  but  close  with  the  Bay  Cities  Water  Com- 

This  should  be  done  in  the  line  of  prudent  forethought  au/J 
sound  business  policy.  At  the  present  time  you  cannot  buy  the 
Contra  Costa  Water  Company  for  less  than  seven  millions  oi 
dollars.  You  don't  know  that  we  can  buy  it  for  that.  If  we 
install  an  independent  plant  of  our  own,  the  competition  with 
the  Contra  Costa  Water  Company,  about  which  so  much  has 
been  said,  will  force  that  company  to  sell  at  a  fair  figure.  You 
can,  therefore,  by  wise  business  policy,  purchase  both  the  supply 
of  the  Bay  Cities  Water  Company  from  Isabel  and  Del  Valle 
creeks  and  the  Contra  Costa  Water  Company's  supply  for  seven 
or  eight  millions  of  dollars.  In  other  words,  if  you  let  this 
opportunity  go  by  you  will  be  compelled  to  pay  as  much,  or 
nearly  as  much,  for  the  Contra  Costa  Water  Company's  plant 
as  you  need  to  pay,  if  you  exercise  sound  business  forethought, 
for  BOTH  the  Bay  Cities  Water  Company  plant  and  the  Contra 
Costa  Water  Company  plant. 

I  would  not  do  any  injustice  to  the  stockholders  of  the 
Contra  Costa  Water  Company,  but  I  would  not  be  forced  by 
the  managers  of  that  company  to  pay  more  than  the  property 
is  really  worth.  Paying  what  that  property  is  really  worth, 
we  can  in  time  get  both  the  Bay  Cities  Water  Company's  plant 
and  the  Contra  Costa  Water  Company's  plant  for  between  seven 
and  eight  millions  of  dollars,  say  eight  million  at  the  outside, 
and  do  no  real  injustice  to  the  stockholders  of  the  Contra  Costa 
Water  Company. 

I  close  as  I  began :  The  city  government  during  the  last 
two  years  has  done  its  best  to  solve  the  water  problem.  A  plan 
has  been  devised  that  in  my  opinion  fully  solves  the  difficulty. 
It  is  presented  to  you  for  your  action.  Every  voter  who  has 
the  interests  of  the  city  at  heart  should  carefully  investigate 
the  question  and  go  to  the  polls  on  the  eleventh  of  March  de- 
termined to  cast  his  ballot  in  such  a  way  as  shall  best  enhance 
the  interests  of  the  city  of  his  home. 



Bay    Cities    Water     Company's    Proposition, 
to   Oakland. 

1.  A    minimum   of     20,000,000  gallons   of    water 
daily;  probably  25,000,000, 

2.  Water   clear,    pure,   soft    and    wholesome.     No 
possibility  of  contamination. 

3.  Water   drawn    from   over    100   square  miles   of 
practically  uninhabited  watershed. 

4.  Delivered  at  the  charter  line  of  Oakland. 

5.  Location     of     watersheds,      Mount     Hamilton 
Range,  Santa  Clara  County. 

6.  Two  reservoirs,  capable  of  storing  a  minimum 
S,5oo  millions  of  gallons. 

7.  A;  guarantee   to  Oakland   of  quiet  pos- 
lon  of  the  above  properties. 

8.  Oakland  need  not  fear  ligitation.     Opposing  in- 

can    only    attack    BAY    CITIES     WATER 
COMPANY,  not   City  of  Oakland. 

9.  Work  for  the  masses  for  three  years. 

ALL  THE  ABOVE  FOR  $3,750,000.00.